Tuesday, January 31, 2012

We have left it up to the Indians abroad whether they continue to remain Indian nationals or to adopt the nationality of whatever country they live in. It is entirely for them to decide. If they remain Indian nationals, then all they can claim abroad is favourable alien treatment. If they adopt the nationality of the country they live in, they should associate themselves as closely as possible with the interest of the people of the country they have adopted...

A very clear statement indeed. Having helped India achieve independence 10 years prior to this, the Indian diaspora (the "Indians abroad", a group of which Ghandi himself was a member at one time) was then informed that their nation was not overly interested in them and was not at all prepared to give them any recognition whatsoever, much less any help. At that time there were around 4 million PIOs, "People of Indian Origin", scattered all over the globe but living most in former British colonies.

Fast forward to 2003 and the very first Pravasi Bharatiya Divas, the "Day of the Indians Abroad" and the recognition by Deputy Prime Minister L.K. Advani of the Vishwa Bharati (Global India), the "embodiment of India in the world". Interesting enough many of the diasporans who attended this first ever celebration of the achievement of Indians abroad were not Indian nationals. The tent, so to speak, had been broadened to include the PIO's, people who had roots in India but who were also citizens of other states. The Indian government was proclaiming that it not only had an interest in these people but it claimed them for India regardless of their other affiliations.

What happened in those 50 years to change the Indian government's attitude toward "Overseas Indians" is the subject of Latha Varadarajan's book, The Domestic Abroad. It's a fascinating tale and, as the member of another national diaspora struggling to achieve recognition, I read it with great attention. The institutionalization of relations between the homeland and its diaspora is not obvious and depends greatly on history and an ever-changing political and economic context.

Before independence the Indian diaspora was useful in the sense that it was another resource to be used to win Indian sovereignty but its existence became rather troublesome very quickly once this was achieved. At that time sovereignty was the primary concern and that meant control over a specific territory with distinct boundaries in which the state represents a nation. Indian control over Indian territory was still quite new and perhaps a bit uncertain. The diaspora did not fit well into this discourse. Not only were these people not directly under the control of the Indian government, or physically present to build the new Indian nation-state, they were also the object of rather vicious discrimination in some of their host countries. Was India obliged to intervene on their behalf? A very hard question for a new state. Hence, Nehru's rather cold but clear statement about how exactly the Indian government viewed its citizens abroad.

According to Varadarajan, change came slowly. In part it was Indian emigration that changed the picture. in the 1970's and 80's the flow of highly-skilled people out of India to places like the U.K. and the U.S. became a flood. Another kind of migration, that of unskilled labor, was moving to the Middle East. The first group was composed of highly-skilled professionals and the government worried about the "brain drain." The second group was actually encouraged to leave in the hope that they would find employment in the Middle East and send back remittances to India thus solving two problems at once: unemployment in the homeland and increased foreign capital coming in which was desperately needed.

Another factor that was important were the different economic crisis that the Indian government faced over the years (currency devaluations, foreign exchange crisis and so on). There was a gradual opening of the economy in response to IMF and World Bank pressure. It was in this context that the Indian government started looking toward its diaspora for relief. In 1982 the government announced a "Non-resident Indian portfolio investment scheme" which was very controversial. Not all Indians in the homeland were willing to accept PIOs as being "not so foreign" and thus legitimate investors in Indian enterprises. On the other hand, many of these Indian abroad had made substantial fortunes in their host countries and it seemed reasonable, and to everyone's benefit, to tap into this. Varadarajan claims that it was at this time that attitudes really began to change, "The interchangeable usage of categories like 'Nonresident Indian' and 'Person of Indian Origin' is important because it enabled the blurring of distinctions based on rules of citizenship....making possible the constitution of the India diaspora as a unified social group, with a deep and abiding connection to the Indian nation-state." From "foreign" to "not so foreign' to "one of us" requires a series of mental leaps on the part of the government and the Indian people. Leaps that would be inconceivable, in my opinion, to Americans in the homeland today when they look at their diaspora which is purely "temporary" of course - a neat bit of fiction that is used to justify the very "hands-off' position of the US government today.

The end of the 20th and the start of the 21st centuries ushered in some very concrete steps to institutionalize this relationship between the Indian homeland and the 20 million strong diaspora: dual citizenship, the "Day of the Indian Abroad," a Ministry of Overseas Indian Affairs, and other initiatives.

But what of the PIO's themselves in all this? If I have one criticism of Varadarajan's book, it would be this: it treats the Indians abroad as passive actors with all the action being on the side of the Indian government. What was, in fact, the reaction of the Indian diaspora in 1957 to Nehru's words? How did Indians abroad react to government policies in the years between independence and India's rise in the early part of the 21st century? Did they ever organize? Did they form diaspora organizations to lobby the homeland? How did they react to the change in mentality - going from being perceived as a source of trouble to a source of investment? And most important, is the Indian government's portrayal of them today as "a group that had a deep and abiding connection to the motherland" an accurate assessment of their feelings? Hard to know but if anyone has any sources, I would be very interested.

I, of course, read Varadarajan's story of the Indian diaspora through the prism of my own experience as a member of another country's diaspora (or proto-diaspora if Sheffer is to be believed). Clearly the United States is in a great deal of trouble today with very serious social and economic problems. Having portrayed the American diaspora as a source of vast untapped wealth held by disloyal people, the US government is attempting to appropriate some of their property and income earned in their host countries in order to make a dent in the huge budget deficit and support investment in jobs and infrastructure in the home country. I have referred to this as the "Diaspora Tax War of 2012" and I think that does accurately describe the situation. The actions of the American government are openly belligerent and hostile with no attempt whatsoever to negotiate or to appeal to the loyalties of the 6 million Americans living outside of U.S. territory. It is nothing less than a war against its own people and will not, in my opinion, end well for anyone.

I would invite them to consider the actions of other governments - India is hardly alone in softening its stance toward its people abroad. Mexico, France, China and many other countries have come to terms with their diasporas and expanded their definition of "us" to include those who choose to reside elsewhere. As a result their nations have expanded, they have more power and influence in the world, they have citizens who are and remain loyal to their countries of origin and, I would contend, they have strengthened their nation-states, not weakened them. In a globalized world with ever increasing international migration, this is not only prudent and intelligent policy, it is a winning strategy for the homeland and its diaspora alike.

Is it truly beyond the imagination of the American nation-state to envision a world where the boundaries of the United States of America expand to include "People of American Origin" as citizen-ambassadors, unofficial diplomats, and economic actors all working on behalf of the homeland? A source of rich diversity, a projection of "soft" American power far beyond its present boundaries, and a well of willing investment in the home country to create jobs and pull the nation up and out of its current woes?

Monday, January 30, 2012

Some of the articles and comments I've been reading lately about overseas Americans leave me shaking my head in disbelief. Americans in the homeland seem to think that I spend my days plotting to escape taxes as I sip my wine in a plush Parisian bistro. I thought it might be instructive to open the "volets" (shutters) and give you a glimpse of how one American emigrant in France spends her day.

The day begins between 6 and 7 in the morning. My husband kisses me as he heads out the door to work. Like many people in the Ile de France, he works in Paris and has quite the commute in the morning. He drives our nearly 20-year old car which still runs well because he very careful about maintenance. We are hoping to coax a few more years of life out of it before we have to replace it. The younger Frenchling appears at about the same time my husband leaves and we exchange a few words in English before she heads out the door to school. Her departure signals the end of the morning in English and the start of the day in French.

Like a lot of people in these times of crisis, I am unemployed, so the first order of the day (after coffee) is consulting my mail and the job boards advertising IT positions. Out of all the alerts and job boards I consult, 99% of them are in French with only a few from LinkedIn in English. This morning I set them aside in a folder to be examined more closely later because I have a job interview at 11:00 in Paris and I need to leave early enough to make the train.

I'm out the door a little after 9 AM. Today I am taking the train from Versailles-Chantiers, a station in the center of the city which is about a twenty minute walk from my house. This train station was considered quite modern in the 1930's, today one is quite conscious that it has seen better days. The nicer station in that part of town is Versailles Rive-Gauche which brings tourists to the castle from Paris. Versailles-Chantiers is less safe and is where I had my wallet pickpocketed last summer so I am extra careful to keep my belongings close to me lest I have another unfortunate incident (something I can ill afford right now).

The train itself, however, is clean and dry and warm. As always I have brought along a couple of books and I happily install myself in a good seat and read Patrick Weil'sLa République et sa diversité, Immigration, Intégration, Discriminations. For a round-trip ticket to Paris and back I pay 6.50 Euros (about 8 American dollars) and in about 20 minutes I am at La Defense, the commercial district on the west side of Paris. From there I ascend from the bowels of the train platform into the main station and down again into the metro, line number 1. Very quickly I arrive at in Neuilly-sur-Seine, a very posh district indeed. As I walk toward the recruitment company's offices I scan the real-estate agencies ads displayed in the windows and note a fairly modest two-bedroom apartment selling for 580,000 Euros (about 760,000 American dollars) which serves to remind me why I am not living in Paris. Even the rents are high in the city and because we are down to one income right now we would probably not qualify for something in Paris even half the size of what we have now in Versailles.

By design I am a few minutes early for my appointment. One never knows with the trains and I like to be there ahead of time which is infinitely preferable to being late (even in France). I walk into a bistro next to the office, order a coffee, drink it slowly (it's a pretty good expresso) and still have just enough time to use the bathroom and comb out my hair before I present myself at the reception. They are very pleasant - I am ushered into a conference room, served a cup of coffee and I take the opportunity to read the newspaper while I wait. It is today's edition of Le Figaro (a very respectable Right-leaning French paper). The headline is about Sarkozy's "Shock Reforms." I make my way through the paper and on page 9 in the international section (after the news from the UK, China, India, Syria, and Russia) is a lone article about the U.S. - the influence of Hispanic voters in the Florida primaries. Interesting.

My interview goes quite well but it is tiring. One and a half hours of giving my pitch and having the very nice gentleman explain the realities of the market and my place in it in a very pleasant but firm manner. One subject that comes up is my "prétentions salariales" (salary expectations). I have lowered my price substantially compared to what I could reasonably assume to make given my level of experience and he wants to know why. I have already decided to be very transparent about this and so I explain the American system of taxation on worldwide income. Given the income exclusion of 92,500 USD (about 70,000 USD) it doesn't make any sense for me to ask for a package (base salary, bonuses and profit-sharing) that exceeds that. Even if I am able to defray some of the extra income through tax credits, this will require expensive professional help and I'm not sure to come out ahead. He is floored and I'm sure he'll check the information since he could not envision a country that would encourage its expatriates to earn less while abroad. The interview ends on a good note - I enjoyed the contact and perhaps they will have something for me soon.

Back to the metro and another train and the walk back to the house to have lunch and a cup of coffee before tackling those job advertisements. I mentioned above that the departure of my daughter was the beginning of my day in French. Allow me to expand on that. From the moment she left for school and I left the house every interaction I had, every sign I read, every instruction I followed, the purchase of the coffee from the barman in the bistro, the book I chose to read, the welcome by the receptionist and the interview itself were all in French. I heard not one word of English during the entire morning and I used only one English phrase during my interview and it was "thesis advisor" because I had a blank moment where I could not for the life of me think of the French word. Oh, and there was one advertisement in the metro for an English language school called the Wall Street Institute which touted its strengths in teaching people "English" (and not "anglais").

Just as important, I think was the complete absence of any news, headlines, commentary or even conversations on street, in the metro or the train about the United States. For the purpose of writing this post I paid attention today, and all I could find was the article in Le Figaro. So, my fellow Americans, any French person reading that paper today will take away one image of the U.S. - that of Hispanic voters in Florida highly annoyed by the Republicans. This is not by design or out of disregard for Americans. It's just that people in other countries have their own concerns and don't really spend a lot of time worrying about what is going on "over there." An American emigrant who wants news from "home" has to make an effort - something that was made infinitely more difficult for me (a longtime reader of the New York Times) when their on-line edition started restricting readers to a limited number of free articles per month. I tried at first to be careful and use my views wisely but in the past few months I've given up and now I just get my news from Le Monde on-line (or sometimes Slate) which has no such restrictions.

I'm home now and after having my lunch (and my coffee) I will head upstairs and start making calls and answering ads. 99% of both will be in the "langue de Molière" and I must say that all those customized "lettres de motivation" are a perfect way to improve my written French. If the rest of the day proceeds as planned I will work until my younger Frenchling arrives home from school (about 6 PM) and at that moment the English comes to life once again in my home.

However (and this may be the most important thing I'd like you to understand) at no point in the day does anything resembling an American life appear - only a few American customs that we have decided to keep here because we like them, just like we keep some of what we gathered in Japan that pleased us. That we speak some English at home is much less important that it seems. Over the years I've become very conscious of the disconnect between language and culture. The two people I speak English with, my younger Frenchling and my husband, do not share my culture. My husband has spent nearly all his life in France and my French/American daughter has no memory of living in the U.S. I know their culture but they do not know mine. In our house when we talk about the President, it is necessary to be very precise about which one since the assumption will be that I am referring to Sarkozy.

Once upon a time all this bothered me great deal. It felt like parts of me were slipping away year after year into some strange place where I was destined to be forever isolated - an "exotic beast" who had to be interpreted daily by her own offspring. Those times have come and gone, and today I have no regrets. Though, frankly, I am not sure I'd ever have the courage to go through it again.

Sunday, January 29, 2012

Late this morning the younger Frenchling and I walked up to the Montbauron Gymnasium here in Versailles to watch the fellow members of her Kendo club compete in the Ile de France Kendo Championship.

We were a little startled when the younger Frenchling first informed us that she was going to start lessons at the local club. But after seeing the competition, I have gone from being merely supportive to outright enthusiastic.

Kendo is a modern incarnation of traditional Japanese sword-fighting - the name literally means "way of the sword." But instead of swords, practitioners use a long pole made of bamboo strips tied together called a shinai. The armor I saw was made of modern materiel but was still shaped in a way that recalls the traditional oyoroi armor of the Japanese samurais.

It was fascinating to watch. Bracketing each match were formal gestures (bowing to your opponent and symbolically "putting away one's sword") but the matches themselves were lightning fast and quite ferocious at times. I winced every time someone got in a good blow to the head or the ribs (the younger Frenchling confirms that, yes, it does actually hurt a lot in spite of the armor). To give you some idea of what it was like, here is a brief clip from Youtube (14th World Kendo Competition) that I think best captures the flavor of what I saw today:

As for the participants at the Versailles competition, I had heard that there was a large community of Japanese or Japanese-French in Versailles and, yes, they were well represented. I also noticed that almost all the teams had women members. They were not anywhere near as large as the men but they were both fast and determined. I saw one short statured woman of Japanese origin whip the living daylights out of her male opponent through sheer speed and skill. But what impressed me the most was the attitude of both the competitors and the crowd. Sure, the teams were there to win but they seem to approach each match with humility and a deep appreciation for other people's skill - a deft move by a kendoka was applauded by everyone, not just his or her teammates.

My daughter's club competed and lost their last round in the early afternoon. It was very close - the two teams were tied and an additional match was held to break the tie. First point went to the opposing team and so the other team won the round. We did have time before we left however to buy the younger Frenchling her very own shinai (women's size 38).

Saturday, January 28, 2012

I went down to the Japanese Embassy near Etoile last week to pick up my Japanese police report. As always the Japanese consular officials were very efficient - I was in and out in under 15 minutes. I was dying to know what it looked like (and what is in it) but I will never know because it comes sealed in a brown envelope and I was informed (quite sternly) by the Japanese Consulate that only the French Prefecture has the right to break the seal and see the contents.

Another document we need is an official Certificate of French Nationality (Certificat de nationalité française) for my French husband and we soon discovered that Anne Sinclair was right - it is not as easy as it looks to actually prove that one is French. What exactly is the purpose of this document?

Le certificat de nationalité française (CNF) est un document officiel, qui sert à prouver la nationalité française.
Il indique comment et pourquoi le demandeur a la qualité de français, ainsi que les documents qui ont permis de l'établir.
Il peut notamment être demandé lors d'une première demande de titre d'identité sécurisé (carte d'identité ou passeport), ou pour une candidature à un emploi dans la fonction publique.
(The Certificate of French nationality is an official document that serves to prove French nationality.It indicates how and why a person is French, as well as the supporting documents to support the claim.It can be required when a person first requests a secure identity document (identity card or passport), or when a person applies for a job in public service.)

Sounds like every French person has an interest in having one (just in case, mind you). So how does one go about getting this precious document? Well, it depends on where the French person making the request is located (France, Paris or abroad) and whether or not he/she was born on French territory or abroad. My husband's case is a bit tricky because he was born in Medea, Algeria in 1962 when Algeria was a French dominion. In that case, we were told, my husband, once he has all the documentation, needs to apply at the Versailles Tribunal d'instance (which is happily not too far from our apartment).

Now that we know where to apply, we turned to the issue of what documentation will be required. Turns out that this is quite tricky and depends on the category of the person making the request. There are no fewer than five cases and they are worth examining because they are a snapshot of French nationality law as it is applied today:

Personne née en France, d'un parent né également en France (a person born in France of a parent also born in France): This is the infamous double jus soli rule that says that anyone born in France with at least one parent born in France is French even if the parents and grand-parents were foreigners.

Personne française par filiation (French by filiation) This is transmission of nationality by blood, also known as jus sanguinis. Anyone with a parent who is French is French by right of blood (droit de sang). This must be proved by producing documentation about one's parents and also one's grand-parents.

Personne devenue française par acquisition volontaire (décret ou déclaration de nationalité) (Person who voluntarily acquired French nationality by decree or declaration) These are the naturalized citizens who became French by either applying for it or by decree (it can be simply conferred on a person in some cases).

Personne devenue française pendant sa minorité, en raison de l'acquisition de la nationalité française par l'un de ses parents (Person who became French as a minor child because one of his/her parents acquired French nationality) So this means any child with foreign parents who became French by naturalization during that child's minority received French citizenship as a result.

Personne devenue française par acquisition de plein droit à sa majorité, par naissance et résidence en France pendant 5 ans (Person who acquired French citizenship at his/her majority, by birth and residence in France for at least five years). This is a combination of jus soli and what you could call residency-based citizenship. The two requirements are that the child be born in France and have resided in France for at least 5 years during his/her minority. From this it seems that having lived 13 years outside of France during one's minority still gives a child born in France the right to French citizenship.

My husband falls under the category of "Personne française par filiation" which means that he is now calling the authorities in both the Limousin and Normandy (his parent's regions of origin) in order to get official copies of their birth certificates and those of their parents (his grand-parents). Frankly, he finds this all a bit annoying - his reaction seems to have mirrored that of Anne Sinclair. He was also not amused when I suggested that he might find some surprises in his family tree - a Spaniard or an Italian, perhaps?

The delicious irony of all this, of course, is that the people who have the least amount of paperwork to provide for a CNF are the naturalized citizens (i.e. the foreigners) whereas the French who have been French for generations by blood and soil have to provide a pile of official papers proving Frenchness going back at least two generations. Was this really what the Right had in mind? Probably not. So I guess we can just consider this another unintended consequence of laws designed to harass the "foreign" which result in enormous inconvenience for the "native-born."

Thursday, January 26, 2012

There is a petition up on Signon.org that is calling for the repeal of FATCA (Foreign Account Tax Compliance Act), the U.S. law which has terrible ramifications both for the U.S. and all other countries. It would require foreign banks to report the account information of all U.S. persons (U.S. citizens and Green Card holders) to the American IRS and imposes draconian fines on foreign entities for non-compliance.

Some of the Americans in the homeland I've talked to about this argue that this is a necessary evil and how else is the U.S. to find "tax evaders?" Well, that does kind of assume that Americans abroad are criminals and must prove that their checking, savings, retirement and children's college funds have not been established for nefarious purposes. One would think that the burden would be on the U.S. government to prove that something criminal has indeed taken place and it is very hard to see what an American expatriate is doing wrong when he or she sets up a savings account for a minor child at a local bank.

Some of the Europeans I've talked to have said simply that this is an American problem and since they are not Americans it does not concern them.

I hate to be the bearer of bad tidings, my friends, but this legislation concerns everyone in all countries. Jean-Jacques Rommes, head of the Luxembourg Banking Association, explains why in this presentation given to Democrats Abroad not too long ago. Here are the different victims of this law and the impact it will have on them:

European (and all other) countries: It is an affront to national sovereignty because it by-passes local governments. It is nothing less than the application of American law to people living in other countries with all the inconvenience for local citizens and potential conflicts with local law. How would Americans feel if Canada, Mexico or France demanded that U.S. banks report directly to their tax agencies over the head and without the consent of the U.S. government?

Europeans: Europeans (and people in all other countries) will have to prove to their banks that they are not American citizens or Green Card holders. Imagine that. A French person, for example, will have to prove to their local bank that they have no connection to the U.S. (not born in the U.S., no U.S. born parent and no lengthy periods of residence in the U.S.) In addition to this, all banks that comply with FATCA must update their IT systems and the costs will be very high indeed. Who do you think is going to pay for this? Certainly not the U.S. government or U.S. citizens in the homeland. No, the cost will be borne by all account holders (my French neighbor, for example, or my former colleagues) at that bank whether it is the BNP, the Caisse d'Epargne or any other non-US bank.

Americans Abroad: U.S. persons will be discriminated against. Their accounts will be closed by banks that do not wish to take on the administrative burden of having U.S. clients. Americans abroad will become "toxic liabilities" to be shed as quickly as possible. American businessmen and women in overseas companies will see their authority over company funds stripped from them. Any American wanting to start a business venture with a non-US company will be gently but firmly told to take his expertise and his money somewhere else.

Americans in the U.S.: The impact on the American economy cannot be overstated. There will be a massive disinvestment of foreign capital and assets out of the United States. FATCA gives foreign companies and investors a very good reason to avoid the U.S. entirely. This means fewer jobs for Americans. This means fewer opportunities for American business. The result of FATCA will be Americans and American companies shut out of the globalization game (which may actually be very much to the benefit of America's competition, like China or the EU, in the global marketplace).

The Repeal Fatca petition was started by Rami S. who was kind enough to share her motivations with me for getting involved in fighting FATCA:

I am an American citizen by birth, and have had the broadening experience of living most of my life outside of the US. I have many beloved family members still in the US, and a far-flung and international clan, ever more international with each marriage it seems! My roots are deep enough to be a "daughter of the American Revolution", and, with each generation, there has been in and out migration. To me, this is a fact of modern life -- and life long before the modern era!
I value my American citizenship, I identify as an American. I passionately love the geography of my birthplace... I am as active politically as I can be, from abroad, because I think America needs and benefits from the influence of its citizens who contribute an international, global perspective as a check to isolationism and insularity. We are all connected, in every way...
FATCA and FBAR are policies that radically trespass the normal bounds of international tax law and victimize expats, who, appreciated or not, are valuable citizens...

I could not have said it better myself. I urge each and every one of you, U.S. person or not, to sign this petition and send a clear message to the U.S. Congress and President Obama. The petition is here.

Wednesday, January 25, 2012

Another trip to one of my favorite neighborhoods in Paris yielded an unexpected delight. I was walking back to the métro station with friend and, out of the corner of my eye, I caught a glimpse of something that reminded me of my old neighborhood in Tokyo. We had some time so we took a detour and, lo and behold, there it was - a canal cached behind a park.

This is the Canal Saint Martin which was constructed between 1805 and 1825 and connects the Seine with the Bassin de la Villette. Much of the canal is completely covered but it very discreetly comes out into the open air close to the Place de La République. There are no fewer than 9 écluses (locks) on this 4.5 kilometer canal and the ones I saw (called the Ecluses du Temple) were the loveliest sight I'd seen in Paris in years. You can read more about it at the Mayor's website here which proposes a stroll along the canal to discover:

Tuesday, January 24, 2012

As a lot of you may already know, I work in IT here in Europe. I was recently given a heads-up on an issue that I had completely missed in the media: how U.S. surveillance and anti-terrorist laws are impacting the ability of U.S. companies to compete in a global market.

It starts with something called the Patriot Act which was signed into law by U.S. President George Bush and extended by President Obama in 2011. This act gives the U.S. government broad powers to legally gather information on individuals and entities suspected of acting in ways that are dangerous to U.S. interests.

This Act has been defended as an unfortunate necessity in these troubled times and vilified as an intolerable attack on Americans' consitutional rights but I doubt anyone ever considered that it could be bad for U.S. economic interests as well.

At issue is something called "Cloud Technology" which allows companies or individuals to treat IT as a service that one can purchase from a utility company. Storage, processing power, even applications can be rented as a service like water or electricity. A company no longer needs to have physical servers/computer or local storage because they can just buy what they need from a Cloud Service provider. After a slow start Cloud Computing is now getting to be quite hot. Demand is growing. Politico reports that this is a 41 billion dollar industry that is projected to grow to 241 billion by 2020.

Given U.S. dominance in the computing industry one might expect that U.S. IT companies would be looking forward to reaping in record profits as a result of this new business opportunity. Well, maybe not and the Patriot Act is to blame.

Imagine that you are a multi-national corporation. Do you really want your data and critical applications stored in a country where the government can legally access that data or spy on how you do business? Other countries (like EU countries, for example) have much tougher data privacy laws and wouldn't it make much more sense to use their cloud services instead? That is exactly what is happening with European IT companies touting their cloud services as being much more secure and completely safe from the prying eyes of the U.S. government.

Tough to argue with their logic but the U.S. government, in response to outrage and concern from the U.S. IT industry, is trying. In the Politico article, Ambassador Philip Verveer, U.S. coordinator for International Communications and Information Policy at the State Department, said, “We think, to some extent, it’s taking advantage of a misperception, and we’d like to clear up that misperception.” Apparently even the Obama administration is attempting to limit the damage and reassure potential foreign clients of U.S. based IT services.

I doubt it will work and many others are of the same opinion. Jon Stokes in this article in Wired Magazine points out the following reasons that the U.S. government is simply not credible on this issue:

1. Private sector policies with respect to sharing data with law enforcement are not uniform across cloud providers, and they’re often not completely clear in how they’re stated.

2. Nasty surprises routinely crop up in the press, where we learn that this or that company is turning over customer data to the feds.

3. On a more general level, the US government has shown that when it comes to surveillance, it’s willing to ignore the law time and again.

4. US government agencies don’t trust their own sensitive data to foreign clouds, and often require that such data be stored in a US-based datacenter.

5. Contrary to what cloud companies and lobbyists would have you believe, the PATRIOT Act really does give the US government very broad powers to get their mitts on your data without you ever knowing about it.

This is another great example of how, in a globalized world, lawmakers need to be very careful about the international consequences of local law. A bad decision or a poorly crafted piece of local legislation can have a terrible impact on a country's ability to compete in the global marketplace. Cloud technology is a wonderful opportunity for U.S. IT companies and it could create a lot of jobs for Americans; Alas, it appears that their efforts in this area will be hampered by a ball and chain on their legs called the Patriot Act.

Sunday, January 22, 2012

Now this is very interesting. On December 11 of last year the European Parliament adopted a new directive that would standardize immigration procedures to create a single permit for Non-EU nationals to reside and work in the territory of a member state. This directive also grants Third-country nationals rights at the EU level to working conditions very similar to rights now enjoyed by EU nationals. This MPG article says that the directive will:

Grant them a standard set of rights comparable to those enjoyed by EU workers, such as decent, basic working conditions, recognition of educational and professional qualifications and access to social security.

Third-country nationals will also be granted treatment equal with that of EU nationals in matters concerning pay and dismissal, health and safety at work, the right to join trade unions, and access to public goods and services.

In addition to equal treatment, Non-EU nationals will be guaranteed their pensions if they move back to their home countries at exactly the same rates and conditions granted to EU nationals in the host country.

Concerning the "single permit," Europa says that this directive will create a single residence and work permit for all EU member states with:

•a single application procedure for this permit

•the rights attached to this permit

However, member-states will still be able to decide the conditions under which a residency or work permit is granted or renewed.

There are a few categories of migrants that are not covered by this directive: long-term EU residents (like me), inter-company transfers, seasonal workers and refugees.

Still, this is quite an extension of migrant rights. The member-states, however, did vote for it and once the directive is published in the Official EU Journal, they will have two years to change their national laws to conform to it.

I thnk this clearly demonstrates that EU member-states are committed to creating a common European immigration policy. Something they have been working on since 2005. As I said before, the EU moves slowly but, like a glacier, it is a powerful, nearly unstoppable, force once it gets a bit of momentum.

Friday, January 20, 2012

The United States of America has a citizenship-based tax system. Almost all other countries in the world (the only exception is Eritrea) have territorial-based tax systems. These are facts. To understand why this is so, have a look at this brief from American Citizens Abroad which I think does a splendid job of explaining the history of American tax policy and how it impacts all American citizens and Green Card holders in a globalized world.

Facts are good but for most people the consequences of citizenship-based taxation seem distant and complex. Others seem to be of the opinion that anything that will catch "tax evaders" must be a good thing in principle even if it inconveniences a "few" people (like 6 million Americans and tens of millions of immigrants and Green Card holders). I think something was lost in translation here and what we really need is a good interpreter.

A few days ago in response to an Washington Times article about FATCA and off-shore bank accounts someone took on that job and he/she did it so well that I'm going to post his analogy here.

"What if you were born in California but moved to New York early in life. You live and work and pay taxes in New York for 30 years and one day you find out you were supposed to ALSO file and pay taxes to California, because you were born there and never formally renounced your residency! You are a California Tax Evader! Since you didn’t report your New York bank account to California authorities, they are going to confiscate your assets!You have been paying full taxes and complying with New York law, but sorry buddy, you were born in California and therefore must report and pay taxes to your birth state until you renounce California residency. Oh and renouncing will cost you tons of money and California will threaten to never let you set foot across state lines if you do it. Oh, and your adult children are also facing personal bankruptcy; since you were “Californian” your children are also officially “Californian” until they renounce. Your entire family is destroyed and your New York born wife wants a divorce.Finally, New York banks decide they will no longer let Californians have a bank accounts with them because the reporting requirements for you people are just too expensive. And California banks won’t let you have an account with them either (although they still consider you a resident), because you no longer have an address there. You may therefore have no bank account, no retirement plan, no investments, no credit card, no life.
This grotesque illustration is not at all far fetched. It is EXACTLY what US citizens are facing, if they have for any reason decided live outside of the US. US citizens who have lived outside of the states for decades, who are citizens of another country, who have paid taxes and abided by all laws, are now being pursued and persecuted in a breath-taking witch hunt.Let me put it another way.
Mitt Romney’s parents were Italian immigrants. After they started living, working, and paying taxes in the USA should they have to keep on paying Italian taxes too? Should Italy have the power to confiscate their house because they didn’t send a report of their US banking activity to Italy? Should Mitt be considered an Italian citizen, be subject to Italian reporting and taxes, just because his parents were born there? Should he face total confiscation of his life assets because he misunderstood or didn’t even know about a reporting requirement? Should he have to hire an expensive Italian tax lawyer fill in annual reports to another country or face prison threats? That is exactly what US law does to its citizens abroad, it is absolutely outrageous and unacceptable."

That, my friends, is what citizenship-based taxation is all about. Remember, all states have the right to decide whether or not someone is a citizen of their country. Any one of you reading this who has the most tenuous connection to another state could wake up one day and find out that not only are you a dual citizen, but that you have duties and responsibilities to another state that you may have not lived in for years (or in some cases never ever lived in). The U.S. has chosen to impose this on its citizens wherever they live and work and there is really nothing to stop other states from doing the same thing to Americans, many of whom have immigrant parents or grand-parents.

The U.S. has every right to decide who its citizens are and so does every other state on the planet. However, just because a state is acting within its rights, doesn't make the outcome right. Citizenship in a democratic nation-state is based on consent, the right to effective representation and equal treatment under the law. The U.S. implementation of citizenship-based taxation violates each and every one of these principles.

Thursday, January 19, 2012

I've been to China twice - once on business and once on a tour of Chinese start-ups and businesses for school in 2010. We saw the World Expo in Shanghai which was a once-in-a-lifetime experience. I love that city - so much energy and "dynamisme." As you cruise the huge biotech and industrial parks just on the outskirts of the city, you have to ask yourself, "What am I doing with my life?" It's that kind of place.

However, China was firmly fixed in my head as a country of emigration. I come from the West Coast of North America which for years has been a destination for Asians: Vancouver, Seattle, San Francisco and Los Angeles. Some of the instructions on my King County ballot for local elections is written in kanji. The former governor of the state of Washington is Gary Locke, a Chinese-American, who was recently named U.S. Ambassador to China by President Obama.

So I was very surprised to read that China is becoming a country of immigration. The Migration Policy Institute just published a special series called Migration in the Modern Chinese World. They talk about the Chinese immigration to other countries and the diaspora (33 million strong and a large and powerful force in the world) but all that is much less interesting to me than the idea that migrants are finding it to be a choice destination. The "pull" is obvious: a good economy, lots of opportunity, and a labor market that is experiencing shortages as the consequences of the "One Child" policy come to fruition. Low fertility today and sluggish population growth mean that filling those jobs will be a real challenge for China in the future.

Chinese emigration is still more significant than immigration but there are signs that this may change. Here are some surprising facts that I gleaned from various articles:

1. Labor shortages were so acute in some regions in this past decade that illegal immigration became a problem. Tens of thousands of undocumented laborers were imported from places like Vietnam and other Southeast Asian countries. There are also, for obvious reasons, significant flows of migrants from North Korea. And finally there are people coming from as far as Africa - Congo, Nigeria and Mali. You know a place is an attractive destination when people are willing to risk arrest, possible imprisonment and deportation just to be able to come to work and live there.

2. In 2007 2.85 million people came legally to China for employment. That number dipped slightly in 2009 but was up again to 2.27 million in 2010. The Chinese census counted over 1 million people from outside the mainland living in China of which 539,000 were long-term resident foreigners. Yes, in a country of over a billion people, this is a drop in the bucket, but it is still a huge number and apparently there is plenty of room for more if they have the right skills.

3. Have look at the top sending countries and prepare to go into shock. The Republic of Korea tops the list but the United States of America is in second place with around 71,000. Then comes Japan, Myanmar, and Vietnam. Canada and France are in 6th and 7th place and Germany is 9th. We know that one factor that pulls migrants to a place is the existence of a diaspora community already in place so it is very likely that future migrants to China will come from these countries. These numbers are even more significant when you consider that North Americans and Europeans don't usually know the language and can't even read it since the writing system is character-based (kanji). This is an important barrier to finding a job and integrating but it doesn't seem to be stopping them.

All this has the Chinese authorities re-examining their immigration policies. Right now they don't have rules to manage long-term foreign residents much less permanent ones. This document, The Rules for Foreigner Administration, really only applies to people on short-term visas and temporary residency permits. China seems to have realized that something more comprehensive needs to be put into place to manage international migrants and they are working on it.

I think this is a fabulous development and I hope it continues. The world knows China and the Chinese mostly through media coverage and its diaspora but that's not nearly as useful as knowing the country and the people through the eyes of their compatriots who live and work there. Long-term resident foreigners will be able to help their home countries deal with China as a rising power. It's not just business, it's understanding, which can only come when people are immersed in their host countries and know the culture deeply enough to be able to interpret it for others. And, let's face it, this is very flattering to China. For every international news story that is critical of their internal policies, one must now take into account that, well, a lot of people want to live there so perhaps there is more to the story than what the media is reporting. It's very good for their image and I think it's good for the world. China will be a major power in the 21st century and the more peaceful and positive connections that can be made now, the more likely it is that the competition within the community of nations will continue to be fierce but friendly.

MPI sets the stage: "The economic crisis struck following nearly two decades of unprecedented prosperity across much of the United States. For much of that period, labor demand outpaced the domestically produced new worker pipeline. The U.S. economy came to rely on large numbers of of immigrant workers, and as a result, the number of foreign born increased from 20 million in 1990 to more than 38 million in 2008. " But the official U.S. immigration system is not well-adapted to rapid changes in demand and so an informal "just in time" system (illegal immigration) filled the gaps right up to 2008.

So what happened when the crisis hit in 2009?

A mass exodus.

It is estimated that over 300,000 undocumented workers have left California alone since 2008. A July 2011 New York Times article claimed that "the illegal Mexican population in the United States has shrunk and that fewer than 100,000 illegal border-crossers and visa-violators from Mexico settled in the United States in 2010, down from about 525,000 annually from 2000 to 2004."

In addition to the flight of undocumented workers there was also an exodus of legal immigrants. They went back to places like India and China where there was work and opportunity. This website says the Chinese Education Ministry, "estimates that the number of overseas Chinese who returned to China in 2009 having received a foreign education reached 108,000: a sharp increase of 56.2% over the previous year. In 2010, this number reached an all-time high of 134,800 (a significant proportion studied in the U.S.) " When you consider that a significant number of start-ups in the United States are created by foreigners, this is cause for concern.

Legal in-flows also decreased though not as dramatically as the illegal ones . MPI reports that, "demand for temporary employment-based visas for highly-educated immigrants also slowed measurably, with the annual quota for H1-B highly skilled visas taking more than 6 months to fill during each of the last two years compared to a matter of days or weeks in the years immediately prior to the recession." Those still coming from Europe are very different from previous waves of immigrants - they are young, well-educated and very temporary. They come to work, make their money, and go home.

I would add to this another figure that may or may not be related to the economic crisis. Recently the AARO (Association of American Residents Overseas) revised its number of Americans citizens abroad to about 6.3 Million (the previous figure was 5.5 Million). If we had better numbers would we see more native-born Americans becoming international migrants as a result of unemployment and bad economic times at home? There is not enough data on American emigration to draw any reliable conclusions and, in any case, I fear that no one really wants to know the answer.

All this demonstrates that there is a serious disconnect between the reality and the immigration debate in the United States. Politicians there seems to be just as manipulative as those in France when it comes to using this issue to get votes. It's almost surreal to listen to Michele Bachman talk about building a double-fence between the U.S. and Mexico. Is she aware that the unemployment rate in the U.S. is 9.1% and only 5.26% in Mexico? The wall(s) she proposes are completely superfluous but the voters she appeals to seem blissfully unaware of this.

In both Europe and the United States are we looking at what Laurence Gonzales would refer to as
"a failure to revise the mental map?" The old frames were 1. the rise of the EU and slow but steady growth and financial stability in the Euro-zone and 2. the "Land of opportunity" meme that has characterized the United States for much of its history. Politicians and citizens in both places seem to be operating on the assumption that nothing has fundamentally changed and so, by extension, they don't have to.

The United States is and has always been a country of immigration. Of all the things that can be said to hold Americans together, the most important may be a belief that their country is a "land of opportunity" and that everyone wishes to come to America to be a part of it. Today it is still a place where opportunity is to be found but it's not the only place. There is competition and migrants have a very effective method of expressing their preferences - not at the polls but with their feet.

Monday, January 16, 2012

I've been doing a lot of blogging recently about the rights and responsibilities of citizenship. For every post I write I probably read 3-4 books. I've come across some very good titles in my research so I thought it was high time I undated this reading list. I highly recommend all the titles below - read them and you will never look at citizenship the same way again.

International Migration in the Age of Crisis and Globalization by Andres Solimano (2010).
This is a very well-written, well-argued book. The author is ambitious and confronts some of the most difficult topics around migration: Why is International Migration Such a Contentious Issue? Are Goods and Capital More Important then People? Don't Always 'Blame' the North, and so on.International Migration and Citizenship Today by Niklaus Steiner (2009). A very fine book on the political, economic and cultural impact of immigration. He frames the discussion around two essential questions: What Criteria to Admit Migrants? and What Criteria to Grant Citizenship?

Citizenship Today: Global Perspectives and Practices edited by T. Alexander Aleinikoff and Douglas Klusmeyer (2001). This was one of the best books I read on the topic of citizenship with essays by Patrick Weil, Karen Knop and Richard T. Ford, among many others. I particularly enjoyed (and will discuss in a future post) Ford's contribution called "City-States and Citizenship" which was, for me, a real revelation.

The Politics of Citizenship in Europe by Marc Morje Howard (2009). A really fine study of the citizenship policies of the oldest member-states of the EU. Read this book to really grasp how citizenship laws have changed over time and the reasons why.

Beyond Citizenship: American Identity After Globalization by Peter Spiro (2008). Excellent book that examines how globalization has changed the value of citizenship overall and American citizenship in particular. Very thoughtful. Very well-written.

Qu'est-ce qu'un Français? by Patrick Weil (2002). Mr. Weil spent over 8 years in the archives researching this book and it is fascinating. France has been something of a test lab for just about every combination of jus soli and jus sanguinis citizenship possible. Everything has been tried and tried again. I read the book in French but it is also available in the usual places in English.

Gender and International Migration in Europe by Eleonore Kofman, Annie Phizacklea, Parvati Raghuram and Rosemary Sales (2000). If you are looking for some empirical evidence (as I was) for how migration, immigration policy and citizenship rights have different outcomes and impacts for women, this is a good place to start.

The Birthright Lottery: Citizenship and Global Inequality by Ayelet Shacher (2009) An attack on both jus soli and jus sanguinis methods of transmitting citizenship. Fascinating argument.

Aliens in Medieval Law: the Origins of Modern Citizenship by Keechang Kim ((2000). I've been meaning to write a post about this book since it has a very original take on the historical roots of modern citizenship. I recommend it highly.

International Migration, Remittances and the Brain Drain edited by Caglar Ozden and Maurice Schiff for the World Bank (2006) This book contains a number of very interesting essays about the economic impact of remittances and brain drain/gain. The editors point out that the potential for economic benefit for all parties (individuals and sending and receiving countries) is substantial but policy decisions need to be made carefully (we are talking about people after all).

Let Them In: the Case for Open Borders by Jason L. Riley (2008) The author makes a very radical argument for simply opening the doors and letting people move where they wish.

Sunday, January 15, 2012

I don't know how many of you are old enough to remember the year French comedian Coluche ran for the Présidence de la République. It was back in 1980 and Valéry Giscard D'Estaing was facing a challenge from the Socialist party candidate, François Mitterrand. Coluche seemed to have thrown his hat into the ring just for fun. His motto was, "Ils nous prennent pour des imbéciles alors votons pour un imbécile !" (They are taking us for fools [the politicians] so why not vote for a fool!)

It was funny, it was different and added some excitement to an otherwise rather dull race. Nobody took it very seriously until the polls results came out: Coluche got 16% of the potential vote. Think about it, 16% of the French were thinking about voting for a comedian, a modern day clown who nevertheless, in my view, had some of the most pertinent and intelligent commentary on French politics at that time. Thee poll results struck fear into the hearts of the more conventional candidates and they put pressure on him to remove himself from the race which he finally did in 1981. Mitterand went on to win that year.

30 years later something similar (and just as interesting) is happening in the U.S. Steven Colbert is an American comedian who has a television show called the Colbert Report. To understand why this show is so funny (I'm a regular viewer) you have to understand the context. In the U.S. there are quite a few Right and Left-wing personalities (not politicians) who have very popular radio and television shows; Rush Limbaugh, Glenn Beck and Bill O'Reilly to name just a few. The Colbert Report is nothing less than a spoof (a parody) of these programs. Colbert plays a self-absorbed, pompous, conservative right-wing talk show host and pokes fun at them and at American politics in general. It is hilarious and even people on the American Right find him amusing. It's just that well done.

The U.S. is right in the middle of the Republican (conservative) party state primaries and the next state on the agenda is South Carolina. Last week Public Policy Polling released a poll that showed Stephen Colbert (who is not even on the ballot) winning 5% of the vote which puts him ahead of at least one respectable (and real) candidate, Jon Huntsman. See this article from The Guardian for the details. Very embarrassing for Huntman but the real question was: what will Colbert do? And this is where things start to get mildly serious. Aside from the fact that his entering the race would most likely have a (minor) impact on the results, Colbert also runs something called a PAC (political action committee). This is a fund (perfectly legal) through which private people and organizations funnel money to and channel their support for candidates and causes. The rule is that PAC's cannot "coordinate" with the candidates in any way - nice in theory but, frankly, I doubt anyone really believes it. Colbert's PAC is called the "Colbert Super PAC" and he has apparently raised quite a bit of money. So, there were two questions in the air last week: Will Colbert run and what will he do with his PAC?

Saturday, January 14, 2012

Place de la République to be precise.
I headed into Paris today to work on a project with a friend and we had agreed to meet at our school which is in the 11th district near the rue de Temple. Every time I visit the area I'm struck by how much I love this part of the city which is, frankly a bit scruffy. Scruffy but lively. This is where I met and had a very long and illuminating conversation with the Class War Experts. They weren't there today but I had something in compensation for their absence - a rousing "manifestation" (excuse for a party) in support of something (or someone) but I couldn't tell what (or who). Very festive.

So I wasn't sure how to react to the news that the Place is undergoing a facelift. The beautiful statue of Marianne is surrounded by ugly green barriers and there are wires obstructing one's view of this magnificent monument.

The lady has been standing here since 1883 so maybe it is time she was tidied up a bit. The graffiti on the lion, for example, really does have to go.

Not far from Marianne is another lady. This rather odd statue stands in a park and I used to walk by her every day when I was going to school in the area. I have absolutely no idea who she is or what she represents. If anyone knows, please feel free to clue me in.

Friday, January 13, 2012

It was a good Christmas at the Flophouse. I had a number of books I had been lusting after and, lo and behold, Santa (via La Poste) graciously fulfilled my wishes. Ever since late December, I've had my nose in a book (actually I've had my nose in a book since I was 5 years old much to the despair of my loved ones) and I've just finished one that I thought you might be interested in: Language, Nation, and State: Identity Politics in a Multilingual Age (Europe in Transition: The NYU European Studies)

It's a book of essays edited by Tony Judt and Denis Lacorne about language and identity - topics that people tend to have very strong feelings about. All of the essays in the book are excellent but there was one that I thought was outstanding.

"Difference Rights and Language in France," by Alain Fenet, a professor of International and European law at the Université de Nantes. Throughout her history, France has been a multi-lingual nation and this was still true up until the 20th century. I remember a trip to Brittany about 20 years ago where I met an farmer whose standard French was very strange (he had a very odd accent.) I asked my family about it and they explained that his first language was Breton, a Celtic language that is still spoken by people in that part of the world. I found this comforting - a confirmation that one could have an accent, or not be a native French-speaker, and still be French.

Though French has been the official language of France since the 17th century, there is a world of difference between a nation's language policy and the "facts on the ground." It took centuries before multi-lingual France become mono-lingual France and even today there are holdouts in the provinces. Call these people "the enemy within" which, in some ways, remains just as threatening as the external enemy, the Anglo-Saxons and the growing hegemony of English. Fenet shows how laws to protect the French language: Bas-Lauriol Law (1975), the amendment to the French Constitution (1992) which says, "French is the language of the Republic," and the infamous Toubon Law (1994), were also fine weapons in the hands of those wishing to eliminate regional differences and marginalize local languages in the Hexagon.

Then came Europe to the rescue with the European Charter for Minority Languages. This EU charter recognizes that there are many languages in Europe and offers some protection against their elimination. This posed quite a problem for the French government and in 1999 the Conseil Constitutionnel did indeed declare that the Charter was incompatible with the French Constitution since:

The Charter conferred 'some specific rights to groups of speakers of regional and minority languages, in territories where these languages are used' and 'tended to recognize a right to practice a language other than French not only in private life but also in the public sphere.'

How did the story end? It didn't. We are the year 2012 and this is still an on-going issue, a festering sore in the heart of an otherwise blissful and trouble-free Europe. France is hardly alone here - see this document for progress of countries on the implementation of the Charter. Very recently Francois Holland, the Socialist candidate for the French presidency was questioned about it during a campaign stop in Strasbourg. He responded as any good politician would - he promised to "engage discussion" which in my mind indicates that any decision on this will be put off as long as possible.

Back to the book. All of the above came from a reading of just one of the ten essays in this book. Trust me, all the other essays are just as good, just as rich, and you can read about and admire the language policies of many states: Switzerland, Israel, Canada, Ukraine, Belarus and California. The book is a bit pricey but worth every penny.

Thursday, January 12, 2012

This is brilliant. Ikea has installed a 54 square meter apartment right smack in the middle of a Paris RER station (A line). I live on the C line but I may have to head into that part of town just to have a look. 5 people are living in it for 6 days much to the amusement of Parisian commuters. This idea is to show people all that can be done with a small place and a little creativity.

Wednesday, January 11, 2012

After French ministers met with representatives from universities and the "Grandes Ecoles" late December (apparently they did not meet at that time with students or their organizations) the government announced that they would be releasing "une circulaire complémentaire" to the Prefectures. Le Point reported this on January 4th:

Le Monde had more here including an admission from one government minister, Laurent Wauquiez (Higher Education) on French television that, "On s'est plantés, il faut le dire clairement." (We screwed up. It is necessary to clearly state that.) This man has my complete and total admiration - it takes enormous courage to say something like this publicly in this country.

The new text, however, is not a replacement of the original May 31 Circulaire, it is a "clarification". The Prefectures are still obliged to apply the original directive but they are to do so in such a way that, "la nécessaire maîtrise de l'immigration professionnelle ne se fasse pas au détriment de l'attractivité du système d'enseignement supérieur, ni des besoins de certaines entreprises." (the necessary controls over professional immigration do not adversely impact the attractiveness of French higher education and the needs of certain companies.)

I see. Actually, I don't. And I'm not only one who remains a bit skeptical. The latest news is that, after meeting with students, the presidents of France's Grandes Ecoles replied by complimenting the government for its willingness to move in the right direction while still insisting that further "clarifications" need to be made. French law, they say, is clear: all foreign graduates who have received a job offer commensurate with their education have the right to receive a work permit (article L311-11). End of story.

And that is where we are today. We'll see how the French government responds to this.

Tuesday, January 10, 2012

I have spent the last few days reading and contributing over at the Isaac Brock Society and following Just Me's links on his Twitter feed. It has been a real education for me. There is a saying in French, "nul n'est censé ignorer la loi." (There is no excuse for not knowing the law.) I had no idea how ignorant I was until I met people who have done the research and do know what they are talking about.

Now that I am a little less ignorant, I would like to take this opportunity to make an important clarification about, and an appeal on behalf of, what are called "U.S. Persons." Much of what I have posted here about U.S. tax law and reporting obligations I have tied to U.S. citizenship and that turns out to be a bit misleading.

U.S. citizens, I said, are taxed on their worldwide income. This is still quite true but it is not the entire story. More accurately, I should have said, "U.S. persons" are taxed on their worldwide income. This statement is vitally important to understanding just how aberrant the U.S. tax system is (and just how dangerous the FBAR and FATCA regulations are) because the term "U.S. Persons" includes U.S. citizens but is not limited to them. Believe it or not, there are other categories of people concerned, people who are not citizens of the United States, and they have even less representation and less of a voice than overseas Americans.

A U.S. person is: a corporation or entity based in the U.S., a U.S. citizen living in the U.S. or abroad, or a Resident Alien living in the U.S. (in other words, a legal immigrant or a Green Card holder) or you meet the Substantial Presence test (i.e. you live in the U.S. for a certain number of days a year).

All these people have exactly the same tax and reporting obligations on their worldwide income. Yes, my friends, an immigrant or a Green Card holder living in the U.S. must report his or her worldwide income to the American IRS, report all his or her foreign bank accounts (even ones back in the home country) and is impacted by FATCA in much the same way as U.S. citizens.

To give you some idea of how this might work in practice, let's consider a hypothetical situation where my foreign spouse and I return to the U.S. Upon receiving his Green Card my spouse would be:

1. Required to disclose all his U.S. income AND anything he earned in France (interest, dividends, rents) on assets he acquired before entering the United States. Depending on the type of income, he may be required to pay U.S. taxes on that French income.
2. Required to fill out an FBAR (Foreign Bank Account Report) disclosing all of his accounts in France and the balances.
3. And finally he would be required to fill out the new form 8938 (FATCA requirement) revealing his "foreign financial assets" (in other words just about anything he has in France).
4. Last but not least, in theory his bank in Paris would be required to turn over his account information in France to the IRS since by accepting a Green Card and residing in the U.S. he is a U.S. Person (not a citizen, mind you).

Not a pretty picture is it? Failure to comply with the above may result in draconian penalties even if no tax is due. I had no idea the U.S. tax system worked this way for immigrants and, I assure you, neither did my French spouse.

Clearly a potential immigrant to the U.S. with assets in the home or a third country would have to have a special kind of insanity to subject himself to this system with all the paperwork and potential for double-taxation. And it would do this person absolutely no good whatsoever to become a U.S. citizen since this would change nothing. On the contrary, being a citizen would actually make it worse - one might shed a Green Card relatively easily (if done before the immigrant acquired too many assets in the U.S. or abroad) but U.S. citizenship is forever unless one renounces.

You know, if I were tasked with designing a system with the maximum number of disincentives in order to prevent educated immigrants with existing assets to come to the U.S., I doubt could have done better than this. While this system has existed for some time, it was not well known until FATCA brought all these issues to light and the IRS actually started enforcing the rules. Most immigrants were never aware of them and many are now in a terrible position made all the worse because they cannot vote. I wonder if the French diaspora in the U.S. has brought this up with Mr. Courtial.

As for potential immigrants like my spouse, they have a lot of thinking to do. I suspect that the young, educated, childless ones will continue to go to the U.S. but I doubt they will naturalize and surely they will have every interest in limiting their stay. Older experienced workers with families and assets in the home country will probably avoid the U.S. in favor of places like Singapore or Canada.

Please feel free to correct me if there are any errors or omissions in what I have written here. This is a complicated subject and I am not a lawyer or an accountant. Also, I know that there are a lot of you visitors to the Flophouse are interested in immigrating and working abroad. If you have a moment, I would very much like to have your impressions on this. For U.S. citizens, how has the U.S. tax system impacted any ideas you might have had to live and work abroad? For those of you from other countries does this information make you more likely to choose another another destination over the U.S.?